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What is a Freelance Contract? A Quick Overview

Dec 13, 2019
(updated: Dec 1, 2022)
Lesson duration: 5 min

You know you need a contract. How do you know that?

  • Maybe something went wrong with your last project and a freelance contract would have helped.
  • Perhaps you want to appear more professional as an independent contractor to land better clients.
  • It could be that you are pitching for a new job that is a big step up for your business.

Whatever the reason, we've got you covered. In this quick overview of the fascinating world of contracts, we'll help you understand what a contract is, why you need one, what to put in it, and how to get one quick.

If you just want to skip to getting your contract sorted, click here to go to our free freelance contract templates page and get started.

What is a Freelance Contract?

A freelance contract is a legal agreement between the you and your client clarifying the freelance work you will do and how much they will pay you to do it. A legally binding contract contains three simple elements:

  1. There must be agreement between the two parties to create a legally binding contract.
  2. There must be some exchange of economic value.
  3. Finally, there must be the intention to enter a legally binding agreement.

So, if you agree to do some work for a company and they agree to pay you, then you have a contract. However, this simple agreement may be legally binding but still create issues for you and your client.

Here are three reasons you need a more thorough document.

Freelance contract

3 Reasons You Need a Freelance Agreement for Every Client

Freelance jobs are not always easy to get, and so you should make the most of every opportunity. A written contract will help you win more clients and protect the work you already have.

A Written Agreement Makes You Look Professional

As an independent contractor, you can set yourself apart from all the other freelance workers by looking like you mean business. A proper freelance agreement shows your clients you understand your industry, their needs, and exactly what goes into successful freelance projects. New clients will appreciate your preparation.

Freelance Contracts Help You Get Paid for All Your Work

Your freelance agreement is the legal basis for all your invoices. Invoices themselves are not legally binding because they are too easy to manipulate and they are issued without joint agreement. When you and your client agree the work and the pay for services delivered, you are in a strong position to get paid for your work.

A Good Freelance Contract Protects Both the Freelancer and the Client

Your written agreement protects your rights as an independent contractor and your client's rights as the hiring party. This could be important in all kinds of ways. Here are some examples:

  • You should reserve the right to use and publish your work in your freelance worker portfolio. Some clients might view this as a violation of their confidentiality. So make it clear in the legal document.
  • Your client might decide to publish your work in a new way without paying you any extra. You could be entitled to more payment for the intellectual property created by you. An example of this might be a book that you wrote for a client that is turned into an audiobook.

Thinking about the problems that might come up isn't pleasant. However, just a few minutes of thought, some clear contract language, and as much detail as possible will protect everyone and help you develop a positive working relationship with all your clients.

Which Terms Should You Include in Your Freelance Contract Template?

Now let's get into the details of the kind of terms or headings you should put into all your freelance contracts. Before we begin, we recommend you do two things:

  1. Create a freelance contract template you can save and modify when you need to create a freelance contract.
  2. Take legal advice about the terms you have included in your contractor agreement and any items you may have left out.

By doing these two things, you will provide yourself with a sound freelance contract template you can update for each job in a matter of minutes.

Now, here are the items you should include in a standard freelance contract template.

Project Overview, Statement of Work, and Scope of the Project

At the beginning of your freelance contract, add these three general items. Here is a little breakdown of what they mean:

  • The project overview should be a sentence or two stating who is doing what kind of work for whom. It does not need to be very detailed. It should include the name and address of both you and your client.
  • The statement of work is similar, but can be more detailed about the services provided during the contract. However, the contract will be much more detailed later, so keep this section general.
  • The project scope is a broad statement intended to clarify what you will do and what you will not do. For example, a writing contract could specify the writer will write all the text but NOT upload to a website.

Being clear about the general items, especially the scope of the project, helps avoid scope creep later. Writing a short description also makes sure everyone is on the same page about the contract.

writing a freelancer contract

The Four D's of Every Independent Contractor Freelancer Agreement

It's time to talk about the details of the project now. You could lump all these together, but it's probably better to dedicate sections of your freelance contract to each specific topic.

Project Details

In the details section of your contractor agreement, you want to list the specific things the client is asking you to provide. Here are some examples:

  • Starting date and initial timeframe for completion.
  • Software or tools to be used for the job.
  • Specific formats for the finished work, if any.

There is some overlap in these sections, but the idea is to include details here that you collect during your initial consultations.

Project Deliverables

Make a list of the project outcomes in detail. Just a few minutes of making this list will help you avoid any misunderstandings. When your client looks over the list, they will quickly spot anything that has slipped through the cracks of chats and email messages. In the end, everyone will know what to expect from your freelance work.

Project Deadlines

Put the due dates on paper and commit to them. Of course, don't sign up to perform services like a miracle worker. Give yourself plenty of time to get the work done. As a self-employed worker, you need to account for illness, time off, and unexpected events that could derail your progress temporarily.

Here are a few things to think about when it comes to deadlines:

  • Under-promise and Over-deliver. No one complains about work delivered early.
  • As a rule, think about how much time your work will require and then add 20%. Sounds like too much? It's really just one extra day.
  • Larger projects may require interim deadlines.
  • If your project is going to rely on client feedback, then make your deadlines relative. For example, your final deadline could be: "Two weeks after receiving client feedback about the draft." Don't commit to a specific date that your client could screw up for you.

Deadlines are super important and meeting them separates the best freelancers from the unreliable cowboys headed towards burnout and bankruptcy.

Project Documents

Your freelance contract will probably involve passing documents and files back and forth. In the contract itself, you should specify at least two types of documents needed for the freelance work:

  1. Documents you need from the client to start or complete the job. These could be a project brief, company brand information, or previous work completed.
  2. Documents or files you will send to the client. You may want to specify file formats and details to make sure everyone is working towards the same goal.

The idea for this section is simply to ensure everyone knows the files and formats required for the project to run smoothly.

Freelance Contract Terms About Your Client Relationship

Your freelance contract template needs a section about your relationship with your client. By this, we mean there are some essential elements in your working relationship. Let's look at these in a little more detail.

Intellectual Property Rights for Your Work

This is most relevant to writers with creative work, but understanding who owns what is created is valuable to know and understand. There are two aspects to this area of your freelance contract:

  1. Your client should receive rights to what they have paid for and their rights should be clear.
  2. You should retain rights for what you have created where this is appropriate.

A good way to think of this is to use the term license instead of rights. When you create something, such as an app or a blog post, you are licensing it to your client for a specific use. They do not have automatic rights to use it for something else.

As an example, let's imagine you are a ghostwriter for an autobiography. The text is finished, and the client received the rights to it as a publisher. They do not necessarily have the rights to turn this into an audiobook, because you have not licensed them to do so.

From the other end, if you are writing something or have built something for someone, do you own the rights to share it with other people or even include it within your portfolio?

This is a complicated area and the governing law varies by industry and location. Even if you have to pay legal expenses, finding someone who can provide legal advice may save you trouble and make your services more valuable.

Confidential Information from Your Client

Your client will probably share confidential information with you. This could be as simple as the keywords they are targeting for their affiliate marketing blog site or as complex as full market analysis of their competitors.

Including a clause in your freelance contract about how confidential information will be marked and protected will give comfort to your clients.

Limitation of Liability

What could happen if something goes wrong? Your freelancer contract can contain a limitation of liability clause so you are not open to damages if your client's project fails for reasons beyond your control.

Non-Compete Agreements

One of the most important things to look at within a contract is if there is anything included about non-competes. As freelancers, our livelihood depends on our ability to work with different clients. If there is a contract that prevents us from working with the client's competitors or anybody else in similar positions, either while the contract is happening or for a period of time after the contract ends. 

Some states, like California, don't allow non-competes and protect the independent contractors living within the state, however, removing this from contracts or being aware of what you're signing up for is something that can be valuable for self-protection in the future.

Why You Should Include a Termination Clause in Your Freelance Contract

Every freelance worker knows the pain of ending work with a client and starting the hunt for new ones. Adding a termination clause into your freelance contract template can protect you from clients who drop you with no notice so they don't have to pay the next bill.

Termination clauses could also work in your favor. If you discover you don't get along well with a client or their work isn't what you thought, then having a clear exit strategy will help you end the contract on a good note.

How to Choose the Best Payment Terms for Your Freelance Business

Payment terms should be outlined in the contract. When you’re creating or evaluating a contract, make sure the questions below are answered. These will help remove any ambiguity from the payment process.

There are many considerations for payment terms:

  • How often will the freelancer be paid?
  • What is the process for submitting payments and invoicing?
  • Are there any payment fees and who pays those?

Besides the questions above about getting paid, there is also the consideration of what happens when a client doesn't pay. Is there a late fee?

Understanding the payment terms within the contract is a way to protect you if you're not paid. Hopefully, this doesn't happen, but you want to be protected if it does. Other things to consider are If you're being paid on a retainer basis, you should consider how you want the money to be paid. It’s not uncommon to have either the full amount or 50% paid upfront, so understanding what’s best in your situation, and what other freelancers in your field do as the industry standard.

Here are a few more useful tips about payment terms our freelancers have picked up along the way.

Pick a Useful Due Date

People used net 30 days for payment terms for years. This was no problem for larger companies. Freelance workers face a different situation. You probably can't wait a month to get paid for every job. You don't have to, though! There is no law governing payment schedules, so make your payment schedule more friendly. Ask for payment within 7 days or 14 days. If your contract doesn't feature heavy late fees, then asking for prompt payment is even easier.

Set up a Payment Schedule for Larger Projects

Larger contracts should have interim payments. You could have a few milestone payments like these:

  • Initial payment to commence the work. This could be anything up to 50% of the value of the contract.
  • An interim payment when the first drafts are delivered.
  • Final payment once the work has been approved.

These milestone payments help avoid unpaid work and they can keep some cash flowing in over the course of a long project.

Offer Multiple Payment Methods

Make it easy for people to pay you and they will be more likely to pay you on time. There are many payment options available for freelance workers. You could use PayPal, Stripe, direct bank transfer, or any of the dozens of international payment firms.

Wishing for an easier way to get paid? You can bill your clients like a pro with Indy's Invoices tool. Click here to set up a free Indy account.

Consider Late Charges for Every Contractor Agreement

Late charges can be a divisive point. No freelance worker wants to get involved in disputes with their clients. These are time-consuming and could be costly. As a service provider, you should expect prompt payment. Late fees may help the other party remember to get the payment posted promptly.

Date and Sign Contracts

The last section of your contract is the signature and date. Your freelance contract becomes a legal document when everyone signs it. So get everyone's signature, along with the date when they accepted the contract.

Electronic Signatures

Electronic signatures are just as valid as a physical signature. Many document companies offer e-signature services. Indy's Contracts tool also accepts e-signatures and even tracks the contract through the signature process for you.

Those are the terms independent contractors should cover in their freelance contracts. Let's ask one more important question.

Should You Seek Legal Advice About Your Freelance Contract?

Yes, talk to a legal expert about your freelance contract template. Once you've done all you can to include every useful clause, send it to a law firm or a legal freelancer for their input. A legal review might cost you a little money, but having a sound contract is going to save you time, money, and hassle down the line.

Get Started Faster with a Free Freelance Contract Template

Indy has a freelance contract template ready for you. You can use our templates to create a freelance contract in just a few minutes. Simply select the appropriate contract template, add your contact details and project clauses, and your contract can be its way to the other party in less than ten minutes.

Ready to sign your next client? You can build Trust with the Contracts tool from Indy. Click here to set up free account and write your first contract

If you're interested in learning more about contracts for specific types of contractors check out our Graphic Design Retainer Contract and Digital Marketing Contracts for Freelancers.

Freelancer Contract FAQ

What should a freelance contract include?

Your freelance contract should include contact details for both parties, a description of the services to be provided, payment terms, and signatures. These are the basic requirements for a contract. Extra clauses can cover add-on services and clarify the scope of the project.

What is a short-term freelance contract?

A short-term freelance contract is a simple contract meant to cover work done over a short period of time or with only one or two objectives. These contracts have a set ending point and are usually very brief.

What's the difference between freelance and employee contracts?

A freelance contract is between two equal parties, while an employee contract is between the company and its subordinates. Here are a few more key differences:

  1. Freelance contracts are for a specific time period or work package, while employment contracts are often open-ended.
  2. An employment contract creates a subordinate relationship. Freelance contracts give the freelancer control of their schedule and work.
  3. Employee contracts guarantee a specific salary, usually over a long period of time. Freelance contracts do not guarantee the same income.
  4. Freelance contracts allow you to work for more than one client, while employee contracts usually restrict who you can work for at any time.

When do you need a freelance contract?

You need a freelance contract when you are working independently for someone else. Every independent contractor should use contracts to protect themselves and their work. Independent contractors need contracts before they start working to protect themselves.

How to negotiate a freelance contract?

Negotiations can be tough, but with a little preparation, you can do the right things to get paid the big bucks. Here are simple tips from a fellow freelancer to help you negotiate your next contract:

  1. Be prepared to make a great first impression. Have your facts and figures ready so you look like an expert.
  2. You may need to sell yourself a bit. Show off your work, create some examples, and be ready to be your own hype man or hype woman. Convince the client you are the prefect choice.
  3. Listen carefully to what the client is saying. Try to take note of their main ambitions and concerns so you can ensure you take care of them.
  4. Look beyond the money. Without selling yourself too short, negotiate on things other than money, such as deadlines, licensing rights, and portfolio building.
  5. Don't feel like the little guy. You are valuable and your work will make a positive contribution to the client's business. Treat yourself like someone you care for when you are negotiating.

These five tips should help you get through your next contract negotiations and launch your new job. Good luck!

How to write a freelance contract?

You could create a Microsoft Word document and start from scratch. Unless you really enjoy contract writing, we don't recommend this approach. Instead, start with one of our contract templates and modify it for your needs. Once you're done, have it looked over by an expert to make sure you haven't missed anything.

Get started today!

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